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What's going on?
French construction materials giant Saint-Gobain worth some $30 billion reached an agreement to buy a stake in Swiss specialty chemicals company Sika on Friday. The tumultuous deal took four years to build…
What does this mean?
Sika had two types of shares: some that investors could buy and sell normally, and a few that were owned by the family who founded the company, which came with more decision-making power. In 2014, Saint-Gobain made an offer to buy all of those more powerful shares, allowing it to effectively take over and run the whole company. But the other investors (who owned the less-powerful shares) didnt like the sound of that, and began a hard-fought legal battle to keep Sika out of Saint-Gobains clutches.
Why should I care?
For markets: A deal that works for everybody and their stock prices.
Almost four years later, the agreement will see Saint-Gobain go ahead and buy those all-powerful shares from Sikas founding family. Importantly, itll sell some of them back to the other shareholders and its overarching authority will disappear: going forward, each share will have an equal vote. Shareholders in both companies appeared pleased with the conclusion Saint-Gobains stock rose by 3% on Friday and Sikas shares climbed 8% higher.
The bigger picture: Alls fair in love, war and dealmaking.
Just as it took Sika and Saint-Gobain four years to come to an agreement, several other deals have recently encountered bumps in the road. Walmart went toe-to-toe with Amazon on the way to successfully acquiring Indian online retailer Flipkart, and Disneys $52 billion bid for 21st Century Fox may yet be usurped by Comcasts larger offer. Furthermore, while Japans Takeda is on course to acquire biotech firm Shire for $62 billion, the initial speculation that rival Allergan might weigh in with an offer threatened to derail its bid.
Originally posted as part of the Finimize daily email.
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